Meta (META) shares fell 15% in after-hours trading after the company's weak second-quarter revenue outlook and plans to "aggressively" increase spending on artificial intelligence this year - while its Metaverse division is expected to continue making losses.
The tech giant's chief financial officer, Susan Li, reported in her April 24 first-quarter results , that projected revenue for the second quarter is in the range of $36.5 billion to $39 billion, below Wall Street's expectations of $38.3 billion.
Li expects expenses to rise to $96-99 billion - from $94 billion to $99 billion due to "higher infrastructure and legal costs."
She also increased capital spending for the full year of 2024 to a peak of $40 billion from the previous $37 billion, as the company would "aggressively invest to support our ambitious artificial intelligence research and product development."
Meta reported first-quarter revenue of $36.46 billion, a 27% year-on-year (YOY) increase that exceeded Wall Street Zacks analysts' estimate of $36.28 billion by 0.48%.
Earnings per share doubled YOY to $4.71, above estimates of $4.32 per share.
Reality Labs, which builds the metaverse, lost $3.85 billion in the first quarter - up from nearly $4 billion lost in the first quarter of 2023. - Meta expects those losses to grow year over year as it funds the division's product development.
